Student Loan Borrowers Can Finally Catch a Break
Editor's Note: Since the writing of this article, the federal Student Loan Debt Relief program has been blocked due to two court decisions; the Supreme Court has agreed to hear arguments for both appeals in February. In the meantime, the Biden administration extended the federal student loan payment pause into 2023. The US Department of Education announced loan repayments may resume as late as 60 days after June 30, 2023.
As uncertainty grows around how the federal government plans to address student loan debt concerns, today we’re launching a new loan program that gives borrowers the opportunity to refinance, at historically low rates, some or all of their federal student loans without making monthly or interest payments until October 2021.
This is great news for borrowers who want to continue benefiting from the government’s temporary pause on student loan repayments–currently scheduled to expire on September 30–and lock in a low rate that will be ready for them once the federal moratorium ends.
Refresher on the Temporary Federal Student Loan Payment Freeze
In March 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law as a response to the COVID-19 pandemic. Among its many provisions, the CARES Act included a temporary holiday for federally held student loan payments and set the interest rate at 0%. This benefit was extended three times, most recently by President Joe Biden in January.
The federal moratorium assists federal student loan borrowers in two ways: those in financial hardship do not have to make payments while borrowers who can make payments have the opportunity to pay down debt at 0% interest.
But here’s the caveat: the pause won’t last much longer, and with upcoming student loan policy still in the works, borrowers are unsure about their next steps. Should they wait to see whether student loan relief is extended and if they will be eligible for it? Or should they take advantage of current refinancing rates, which means making payments before the federal freeze is over? Luckily, SoFi has you covered.
Recommended: Should I Refinance My Federal Student Loans?
How SoFi’s New Student Loan Refinancing Program Works
With our new plan, borrowers can lock in today’s low rate–and continue not making payments through September–by signing their disclosures to disburse the loan in the fall. (Federal student loan borrowers should know that refinancing will mean losing access to federal loan benefits.) Their first payment would be due in October.
Before their loans are disbursed in September, however, borrowers may cancel and stay with their federal program should they decide they no longer want to refinance. If they want to proceed with the new loan, they won’t need to take any additional action.
To apply, people can use the same easy, digital application SoFi is known for – no extra documents or underwriting requirements. Additionally, applicants will be offered the same low rates as a normal Sofi refinance loan. (Use our Student Loan Refinancing Calculator to find out how refinancing can change your monthly payments.)
That’s it. With SoFi, you get to capture the best of both worlds–locking in a historically low rate now without giving up current, temporary federal loan benefits.
Members First, Always
It’s been a difficult year, filled with challenges and uncertainties–and hardships for many. At SoFi, we’re constantly looking for problems to run after and working on solutions to help our members reach financial independence. Unsure about what to do with your student loans during this singular time? Our new program is devised to ease your decision.
SoFi Student Loan Refinance
If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended beyond December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since the amount or portion of your federal student debt that you refinance will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave unrefinanced the amount you expect to be forgiven to receive your federal benefit.
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Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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